4. State regulation of international trade by services

Until recently, the international flow of technology was generally unregulated, but this has changed dramatically since World War II and is likely to change even more in the future. Nations receiving technology have generally been interested in acquiring as much technology as possible as inexpensively as possible. They once sent people abroad for foreign training. This is still extremely important, as is technology transfer through international institutions and foreign assistance programs. Recent attention, however, has focused heavily on business technology licensing and direct investment. Japan's Ministry of International Trade and Investment carefully reviewed technology licenses during the 1950s and 1960s to ensure that the Japanese recipient was obtaining as favorable an arrangement as possible; developing nations are today imitating this approach and seeking to impose more favorable terms on foreign investors who bring them technology. All these efforts take place against a backdrop of debates over the desirability of "appropriate technology"–technology, typically less sophisticated, that seems more in keeping with a simpler and less sophisticated life style, and over the desirability of such advanced technologies as nuclear power or high-energy agriculture. On the technology suppliers' side, there is more and more interest in legislation to prevent the export of technology and thus to protect the suppliers' competitive position. Most of the actual controls have covered only technologies of military significance. However, spurred by the terrorist attacks of September 11, 2001, on the World Trade Center, these concerns have broadened. Some of the military arguments may in fact be excuses for economically motivated restrictions. For example, labor unions have been pushing governments to restrict the export of technologies that might carry employment with them, and nearly all governments have sought to ensure that their own firms and economies were the primary beneficiaries of their subsidies for research in such areas as computers and bio-engineering.

The multilateral negotiations that resulted in the establishment of the WTO in 1994 also produced a significant international legal framework to enhance international trade in and access to services. In April 1994, the Uruguay Round of GATT multilateral trade negotiations finalized the General Agreement on Trade in Services ("GATS").3 The GATS establishes "a multilateral framework of principles and rules for trade in services with a view to the expansion of such trade under conditions of transparency and progressive liberalization,"4 by applying GATT nondiscrimination principles to trade in services.

The financial services sector offers an interesting example of the effects of the GATS. The requirements of nondiscriminatory treatment do not prevent WTO member states from enforcing domestic regulations for "prudential reasons, including for the protection of ... depositors, ... or persons to whom a fiduciary duty is owed by a financial service supplier, or to ensure the integrity and stability of the financial system." As a transitional matter, a second Annex to the GATS, concerning financial services, permitted temporary withdrawal from the GATS commitments.7 Nevertheless, it was anticipated that inclusion of financial services under the GATS regime would "likely ... result in increased market access"8 for international financial services firms. This expectation received a setback when the United States withdrew from the GATS transitional process with respect to the Agreement on Financial Services in June 1995. In July 1995, over 80 states–including Japan, but not the United States–concluded a transitional agreement to liberalize international trade in financial services. In withdrawing from the transitional arrangement, the U.S. Government opted for a policy of measured reciprocity, prospectively limiting access to U.S. markets to financial services firms from home countries that provided reciprocal treatment to U.S. firms.

Essentially, the government had decided to seek market-access liberalization through bilateral negotiations, rather than through the multilateral mechanism of the WTO and the GATS.

Matters remained in play, however, because the commitments of WTO member states participating in the ransitional arrangement were to expire at the end of 1997. Thereafter, WTO member states were expected to renegotiate GATS financial services commitments. In advance of the expiration date, however, the United States joined in the signing of a global accord to govern international trade in services. While the United States made no concessions, in light of the relatively open access to U.S. markets already permitted to non-U.S. firms, the initiation of the accord should result in significant opening of banking, insurance and securities service markets in such countries as Argentina, Brazil, India and Indonesia, among others, that have traditionally been relatively opaque. However, other target markets, such as Malaysia and South Korea, have made no concessions for expansion of access. On the other hand, Japan did agree to significant concessions in terms of opening its domestic financial services markets to international competition. The effect on international trade in financial services could be dramatic. Under the GATS, each WTO member is required to accord most-favored-nation treatment to services and service suppliers of other WTO members. Current restrictions on trade in services of each member must be transparent. Members are also required to administer current restrictions "in a reasonable, objective and impartial manner." A series of general exceptions do apply to GATS obligations, similar to the general exceptions under the GATT.13 More importantly, perhaps, the GATS includes a self judging special exception for essential security interests of member states, similar to the special security exception contained in the GATT. Presumably, this exception would shield U.S. international economic sanctions measures from the requirements and strictures of the GATS.

The list of used basic literature:

1. Oatley T. International Political Economy / Thomas Oatley. – fifth edition- Boston: Longman, 2012- 416 p.

2. Pugel T.A. International Economics: / Thomas A. Pugel – fifteenth edition – New York: McGraw-Hill, 2012 – 770 p.

3. King P. International Economics, Globalization and Policy: a reader / Philip King, Sharmila King - fifth edition - New York: McGraw-Hill, 2009 – 376 p.

4. Feenstra R.C. (2004), Advanced International Trade. Theory and Evidence, Princeton University Press.

5. James Rauch (2008). "growth and international trade," The New Palgrave Dictionary of Economics. 2nd Edition. Abstract.

6. M. June Flanders (2008). "international economics, history of," The New Palgrave Dictionary of Economics. 2nd Edition. Abstract.

7. Reuven Glick (2008). "macroeconomic effects of international trade" The New Palgrave Dictionary of Economics. 2nd Edition. Abstract.

8. Smith, Charles (2007). International Trade and Globalisation, 3rd edition. Stocksfield: Anforme. ISBN 1-905504-10-1.

9. Stanley W. Black (2008). "international monetary institutions," The New Palgrave Dictionary of Economics. 2nd Edition. Abstract.

10. Paul R. Krugman International Economics: theory and policy: / Paul R. Krugman – seventh edition- Boston: 2006

11. Cr. W. Kegley American Foreign Policy: pattern and process / Cr. W. Kegley – 2009

12. Caves R.E. World Trade and Payments: an introduction / Caves R.E. – Boston, 2007